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I have found wso to be in general very academic when it comes to trading, but also very quant based. The general theme is that more math = more money. Honestly I feel this is just not the case. Markets are nothing more than the average of all market participant beliefs at a given time. The market is never wrong, it is always right. That does not mean that significant risk adjusted returns cannot be achieved.

I pose this question to all of wso - What makes a good trader?

The most essential trait I feel that makes a good trader is someone that is consistent. Consistency really is key, sure there will be guys that have terrific years but then give it all back the next year. For the profitable traders they will fall somewhere in the extreme of great highs and lows. What creates consistency? Your ability to make decisions under extreme pressure and completely quell the anxiety. A good trader is one that is able to accept when they are wrong and move on to the next trade. Having a mental repitioure is crucial to building consistency.

The second most important trait is that you must come to truly accept the risks associated with trading. You must be willing to realize that any results from trading are the results that you created. Markets provide the ultimate freedom. In most cases (unless carrying extreme size) there is always a way to get in and out.

Third, there needs to be a positive attitude and belief system in place. Good traders believe they have earned their return and do not attribute it to luck.

Your ability to make decisions under extreme pressure and completely quell the anxiety. A good trader is one that is able to accept when they are wrong and move on to the next trade.

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Comments (17)

  • Drama's picture

    Well, I think that it doesn't matter. As long as you are a cash-cow for the firm, and you get your huge bonus at the end of the year, it doesn't matter. Some people were born to trade, some weren't. People have certain qualities that make them awesome traders, whether it be intuition, luck, math or quant skills or something bizzare, as long as you make money, its all good. I, for one am an asian man who went to princeton, Im trading on a BB FICC, I would say Im good (I'm up 24% so far), but theres this guy I know, didnt go to an ivy, or graduated high school, for that matter, but he is a way better trader than me.

  • sdumb's picture

    q: what makes a good trader?

    a: knowing you are not that good.

  • Default's picture

    this bapebanker guy has been posting about how he went to princeton in many different threads. WE GET IT. You went to a target. so what. Many of us here went to the ivys. Nothing special.

  • Warhawk_1's picture

    errr...i think you guys are missing bapebanker's point, which is that it DOESN't matter whether or not he/you went to Princeton.

    Summing up his post, he's saying that 1) some people were born to trade and 2) There's no specific set of qualities that makes a good trader. Some of them are good bc they are extremely good at math. Some are good bc they were born with the "instinct", etc.

  • marcellus_wallace's picture

    "What the hell does your trading at BB FICC and went to a target have to do with what it takes to be a good trader?"

    Dude, stop being a tool. Those two things have very much to do with being a good trader.

    Target School - Means he received a top education from some of the world's top professors. Don't you think listening to Mankiw teach you macroeconomics then just reading a textbook, will give you a step up?

    BB FICC - He is in the environment to learn from some of the best and brightest. He hs getting firsthand teachings from great traders. As well as access to large pools of capital and unique strategies and models.

    If you seriously don't think that BBs and other top firms can not just get brains and make them great traders, you are mad jaded.

    Furthermore he speaks that even with all his advantages, someone without these can still succeed and surpass him. That is his point, and he hit it bang on.

    The traders I worked with said its all about discipline. Having the discipline to find that specialized niche strategy that works for you and sticking to it. Having the discipline to think ahead and change that strategy when you see it compromising. As well with what you said, having the discipline to never give it all back.

  • Jimbo's picture

    "In my opinion level of education matters little to nothing in being a sucessful trader. A certain level of formal education may be required yes, and certainly to get into good programs its mandatory. I do not think formal education gives anyone a leg up in trading no."

    it depends entirerly on product. good spot fx trader might not be good structured traders and vice versa.

    for the more structured products, some handle on the math is critical.

  • mwgr5's picture

    If you read Market Wizards, the series of books interviews top traders and they have some common threads. I think there is an element of pure talent that cannot be taught. Some people have an athletic type ability to feel out the market. Also, it is important to be very disciplined and stick to strategies and control emotion. I think good traders match their specific skills to what and how they trade.

    www.sharpeinvesting.com

  • trade4size's picture

    Market Wizards is probably the best trading book ever written. PERIOD.

    "Oh - the ladies ever tell you that you look like a fucking optical illusion?"

    "Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

  • mathematics's picture

    be the Big Swinging Dick....thats all it takes.

    [*,...,*]

  • pillz's picture

    imho to add to that the top traders possess the ability to assimilate information from many sources to get a big picture.

  • trade4size's picture

    I have edited this thread to get it back on topic because i really want to see what people think. Anyone that reads my posts know I have a strong opinion about formal education, your not goin to change my thoughts on it, and i wont change yours.

    I pose the question again, what makes a good trader?

    "Oh - the ladies ever tell you that you look like a fucking optical illusion?"

    "Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

  • structure's picture

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  • trade4size's picture

    "Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.